Introduction to this report:
Agricultural Bank's revenue and net profit growth rate in 2023 was in line with expectations. The growth rate of deposits and loans was ahead of peers. The county's contribution continued to increase, asset quality performance was stable, and the holding growth rating was maintained.
Key points of investment:
Investment advice: Taking into account the 2023 financial report and 2024 credit volume and price trend forecast, adjust the net profit growth forecast for 2024-2026 to 0.50%/1.60%/3.62%, corresponding to EPS 0.73 (-0.06) /0.74 (-0.10) /0.77 (new) yuan. The adjusted target price is 5.20 yuan, corresponding to 0.71 times PB in 2024, maintaining an increase in holdings rating.
Deposits and loans have maintained rapid growth, and the county's contribution is outstanding. The growth rates of deposits and loans in 2023 were 15.0% and 14.7% respectively, leading the industry. Among them, the growth rate of county loans reached 19.8%.
Public loans are superior to retail loans, and have performed well in fields such as manufacturing loans, strategic emerging industry loans, and inclusive loans. The total balance of retail consumer loans, operating loans, and credit cards still increased by 31.4% year-on-year in an environment of weak consumption recovery, which is not easy.
Revenue and net profit to mother maintained positive growth in 2023. Among them, 23Q4 revenue increased 1.9% year on year, and interest spreads were further depressed. The decline reached 30 bps in 2023, making it difficult for volume increases to make up for price declines. Net interest income continued to increase negatively, but high year-on-year increases in other non-interest income boosted revenue. Net profit due to the 23Q4 net profit increased slightly by 0.5% year-on-year, and the decline in credit costs in Q4 was limited due to the base figure.
Asset quality performance is stable. Compared with Q3, the defect rate decreased by 2 bps to 1.33%, and the provision coverage rate dropped slightly by 0.3 pc to 303.9%. The attention rate dropped by 2 bps from the end of June, and the overdue rate fluctuated slightly. The non-performing ratio for public loans continued to improve, and the non-performing rate in real estate and manufacturing declined markedly; the retail loan non-performing rate rose 7 bps to 0.73% from the end of June, but the absolute level is still superior to that of peers.
Risk Warning: Demand recovery fell short of expectations; retail loan risk exposure exceeded expectations.